Angela Parfitt

[2017] FWC 1645

[2017] FWC 1645

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.789FC - Application for an order to stop bullying

Angela Parfitt
(AB2017/52)

SENIOR DEPUTY PRESIDENT HAMBERGER SYDNEY, 27 MARCH 2017

Application for an FWC order to stop bullying – jurisdictional objection – whether youthconnections.com.au is a constitutionally-covered-business – whether trading activities substantial or peripheral – trading activities are substantial – jurisdictional objection dismissed – application made within jurisdiction.

[1] Ms Angela Parfitt has applied under s.789FC of the Fair Work Act 2009 (Cth) (the Act) for an order to stop bullying in relation to her employment by youthconnections.com.au (the employer).

[2] In its response (Form F73) to Ms Parfitt’s application, the employer raised the jurisdictional objection that it was not a constitutionally-covered business. I received written submissions and supporting material from both Ms Parfitt and the employer on this issue. This decision determines the employer’s jurisdictional objection only.

[3] Section 789FD of the Act provides:

‘789FD When is a worker bullied at work?

(1) A worker is bullied at work if:

(a)  while the worker is at work in a constitutionally-covered business:

(i)  an individual; or

(ii)  a group of individuals;

repeatedly behaves unreasonably towards the worker, or a group of workers of which the worker is a member; and

(b)  that behaviour creates a risk to health and safety.

(2)  To avoid doubt, subsection (1) does not apply to reasonable management action carried out in a reasonable manner.

(3)  If a person conducts a business or undertaking (within the meaning of the Work Health and Safety Act 2011) and either:

(a) the person is:

(i)  a constitutional corporation; or

(ii)  the Commonwealth; or

(iii)  a Commonwealth authority; or

(iv)  a body corporate incorporated in a Territory; or

(b)  the business or undertaking is conducted principally in a Territory or Commonwealth place;


then the business or undertaking is a constitutionally-covered business.’

[4] Ms Parfitt does not contend that the employer meets the limbs of the definition of ‘constitutionally-covered business’ in sub-ss.(3)(a)(ii), (iii), (iv) or (3)(b). The sole issue for determination is whether the employer is a constitutional corporation (s.789FD(3)(a)(i)).

[5] A constitutional corporation is one that falls within the ambit of s.51(xx) of the Australian Constitution, which states that the Commonwealth Parliament ‘has power to make laws… with respect to… foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth’.

[6] It is clear from the material before me that the employer is a corporation formed within the limits of the Commonwealth. Specifically, it is a public company limited by guarantee (ACN 131 297 213), registered with the Australian Securities and Investments Commission. The issue, therefore, is whether it is a foreign, trading or financial corporation. Ms Parfitt submits that the employer is a trading corporation.

[7] In Cowie, 1Hampton Ccomprehensively canvassed the authorities on determining whether a corporation is a trading corporation:

‘[31] The approach of the Courts and Tribunals to the meaning of a trading corporation has been conveniently summarised by Steytler P in Aboriginal Legal Service (WA) Inc v Lawrence (No 2.) (Lawrence). Having reviewed the developments in the approach of the High Court to arrive at what might be described as the activities test, His Honour found as follows:

“68 The more relevant (for present purposes) principles that might be drawn from these and other cases are as follows:

(1) A corporation may be a trading corporation even though trading is not its predominant activity: Adamson (239); State Superannuation Board (303 - 304); Tasmanian Dam case (156, 240, 293); Quickenden [49] - [51], [101]; Hardeman [18].
(2) However, trading must be a substantial and not merely a peripheral activity: Adamson (208, 234, 239); State Superannuation Board (303 - 304); Hughes v Western Australian Cricket Association Inc [1986] FCA 357; (1986) 19 FCR 10, 20; Fencott (622); Tasmanian Dam case (156, 240, 293); Mid Density (584); Hardeman [22].

(3) In this context, ‘trading’ is not given a narrow construction. It extends beyond buying and selling to business activities carried on with a view to earning revenue and includes trade in services: Ku-ring-gai (139, 159 - 160); Adamson (235); Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd [1982] HCA 23; (1982) 150 CLR 169, 184 - 185, 203; Bevanere Pty Ltd v Lubidineuse [1985] FCA 134; (1985) 7 FCR 325, 330; Quickenden [101].

(4) The making of a profit is not an essential prerequisite to trade, but it is a usual concomitant: St George County Council (539, 563, 569); Ku-ring-gai (140, 167); Adamson (219); E (343, 345); Pellow [28].

(5) The ends which a corporation seeks to serve by trading are irrelevant to its description: St George County Council (543, 569); Ku-ring-gai (160); State Superannuation Board (304 - 306); E (343). Consequently, the fact that the trading activities are conducted in the public interest or for a public purpose will not necessarily exclude the categorisation of those activities as ‘trade’: St George County Council (543) (Barwick CJ); Tasmanian Dam case (156) (Mason J).

(6) Whether the trading activities of an incorporated body are sufficient to justify its categorisations as a ‘trading corporation’ is a question of fact and degree: Adamson (234) (Mason J); State Superannuation Board (304); Fencott (589); Quickenden [52], [101]; Mid Density (584).

(7) The current activities of the corporation, while an important criterion for determining its characterisation, are not the only criterion. Regard must also be had to the intended purpose of the corporation, although a corporation that carries on trading activities can be found to be a trading corporation even if it was not originally established to trade: State Superannuation Board (294 - 295, 304 - 305); Fencott (588 - 589, 602, 611, 622 - 624); Hughes (20); Quickenden [101]; E (344); Hardeman [18].

(8) The commercial nature of an activity is an element in deciding whether the activity is in trade or trading: Adamson (209, 211); Ku-ring-gai (139, 142, 160, 167); Bevanere (330); Hughes (19 - 20); E (343); Fowler; Hardeman [26].” (footnotes and full references omitted)

[32] This summary was adopted by the Full Court of the Federal Court in Bankstown Handicapped Children’s Centre v Hillman (Bankstown).

[33]In an earlier case of E v Australian Red Cross Society, Wilcox J considered whether the Australian Red Cross Society and the Royal Prince Alfred Hospital were trading corporations. The Society supplied blood and blood products, generally free of charge to the community, but received substantial government funding. The Court, in considering the more than $44m received in respect of its blood transfusion services, said:

“These were, of course, substantial sums. They were earned only because the respondents are prepared to carry on blood transfusion services at a scale, in terms of labour and resources, greater than that of many organisations which are undoubtedly ‘trading corporations’. But I do not think that it is appropriate to describe the gratuitous provision of a public welfare service, substantially at government expense, as the conduct of a ‘trade’. It is pertinent to recall the words of Stephen J in St George County Council: ‘It is the acts of buying and selling that are at the very heart of trade’, and also to remember the distinction he made in respect of the distribution of electricity free of charge. In relation to the supply of blood, it seems to me that the first and second respondents do not engage in trading activities. They engage in a major public welfare activity pursuant to agreements with the Commonwealth and the various State governments under which they will be reimbursed most of their costs.”

[34] I note that when considering the position of the Royal Prince Alfred Hospital, Wilcox J found that the scale of the hospital’s trading activities were “substantial enough” to require that the hospital should be regarded as a trading corporation. The details of this aspect are explained in more detail in a decision outlined below.

[35] In Bankstown, the Full Court was dealing with an incorporated association that received most of its funding from government. The Court posed the question in the following manner:

“51 Many activities and services which have historically been provided mainly or exclusively by government are now carried on by companies which undertake those activities or provide those services with the objective of making a profit. Examples are legion and included prison services, electricity generation and distribution, potable water collection or production and distribution and the construction and maintenance of roadways. There can be little doubt that, at least in the ordinary course, companies which undertake those activities or provide those services can be characterised as trading corporations. Does the fact that a corporation likewise provides such services but on effectively a cost recovery basis only, render it inappropriate to characterise that corporation as a trading corporation?”

[36] The Full Court focused in particular on the funding and services provided in relation to the ‘Out-of-Home Care’ (OOHC) programs under which the Centre was paid for services provided to the relevant government agency (DOCS) on a fee for service basis. It concluded:

“54 If those substantial activities can be characterised as trading, then the Association can likewise be characterised as a trading corporation. So much is apparent from the authorities including, in this Court, the judgment of the Full Court in Quickenden (at [51]). The Association undoubtedly provided services to the State and was remunerated for doing so. It is, in our opinion, a proper characterisation of the Association's activities to describe them as selling those services to the State and, correspondingly, the State purchasing them. Indeed that was the language used in the header agreement which governed the contractual arrangements between the Association and DOCS. The provision of a given service under the header agreement resulted in an invoice from the Association to DOCS which it then paid. The prices at which the services were provided were negotiated between the parties having regard to the price at which others provide similar services. The Association employed personnel and acquired rental property to equip it for the task of providing those services. At least in its then manifestation (entailing its size, activities, property and personnel), its continued existence depended on its success in placing itself in a position in which it would continue to be remunerated by continuing to provide those services.

55 All these matters appear to us to point to a relationship between the Association and DOCS as having been a commercial one involving trade in services. It is, of course, true that it is possible to characterise, as the Industrial Court did, the Association's activities as the provision of public welfare services. However the fact that the acquisition of these services by DOCS was for this purpose does not appear to us to detract from the essentially commercial nature of the relationship. It is properly so described. There may be many incorporated charitable bodies in Australia which are nevertheless trading corporations for the purposes of paragraph 51(xx) of the Constitution. As we have noted above, the terms of the header agreements were negotiated, as were the terms of the renewal header agreement. Ultimately by that process, further negotiation as to price was not then undertaken. Thereafter, DOCS did not have to use the services of the Association at all, and the Association for its part did not have to accept any offer or request by DOCS to provide such services. On the evidence, DOCS selected those entities which it wished to provide services, once the header agreements were negotiated, on the basis of the quality of the service to be provided, but the Association (or others) did not have to agree to provide them. It is distracting to note that the services which the Association and others contracted with DOCS to provide were in the "welfare sector" of the economy, to use an expression used by the Solicitor-General.”

[37] In terms of the assessment of trading activities as substantial and not merely peripheral, the approaches do vary to a degree.

[38] In Bankstown, the Full Court observed that “there is no bright line that determines what proportion of trading activities is “substantial””. In the more recent decision of the Federal Court in United Firefighters Union of Australia v Country Fire Authority (UFU v CFA), the Full Court adopted the approach to the characterisation of trading activities as summarised in Lawrence and considered the revenue producing activities in order to assess the cumulative impact of those activities upon that assessment. In terms of the cumulative assessment, Murphy J at first instance in that matter observed:

“[92] The term “substantial” is imprecise but it at least encompasses trading amounts that are “not so small as to be trivial”: Quickenden at [51]. In that case the majority treated substantial and nontrivial as synonymous. In the present case the CFA contends that their trading activities are peripheral, insignificant or otherwise incidental. These terms are drawn from the various cases: see for “peripheral” Adamson at 208 per Barwick CJ; State Superannuation Board at 304 per Mason, Murphy and Deane JJ; for “incidental” Adamson at 234 per Mason J; for “significant” see Adamson at 233 per Mason J; E v Australian Red Cross Society and Ors [1991] FCA 20; (1991) 27 FCR 310 (“E v Red Cross”) at 345 per Wilcox J; Quickenden at [47] per Black CJ and French J.

[93] The ordinary meaning of these words is straightforward. The Shorter Oxford Dictionary defines them to include the following:

(a) “peripheral” means marginal, superficial, of minor importance, not essential or relevant to but subordinate to;
(b) “insignificant” means lacking significance, meaningless, devoid of weight or force, ineffective, ineffectual, of no importance, trivial, trifling, or contemptible; and
(c) “incidental” means occurring as something casual or of secondary importance; not directly relevant to; following up on as a subordinate circumstance.”

[39] Having found that six of the County Fire Authority’s (CFA’s) non-fire fighting activities were trading activities, Murphy J found:

“96 The scope of these activities is broad. While they are secondary to the CFA’s primary purpose I would not describe any of them as insignificant, incidental, trivial or unimportant. For example, the road accident rescue service is a specialised emergency service that the CFA has agreed to provide in country areas, which has required special training of CFA employees beyond the usual fire training, and which the CFA recognises as an important part of the range of services it provides. The CFA has no statutory obligation to provide this service and it does so at a cost to road users and the State through the Traffic Accident Commission. I would not describe the provision of this service as incidental to the CFA’s activities nor as a fortuitous or casual occurrence of subordinate importance. Nor should its provision, viewed in the context of all of its services, be described as trifling, ineffective, superficial or marginal.

97 For essentially the same reasons the provision of fire equipment maintenance services, consultancy on matters related to fire safety, the provision of advice related to the storage of dangerous goods and the sale of goods related to fire safety should not be seen as insignificant, incidental, trivial or unimportant activities considered against the range of services the CFA provides. I infer from the evidence that these activities are seen as important by the CFA, although they are not its central or predominant focus.

98 Nor do I consider that the revenue from these trading activities is incidental in the sense of arising fortuitously or as a result of some other activity. The income is earned deliberately by the CFA from these six specific sources and on the basis that the CFA have special expertise or products of value which they provide in exchange. Taken together the income from these activities is substantial.

99 While the quantum of income from the CFA’s trading activities relative to its non trading activities is small, I am disinclined to treat almost $13 million of revenue as minimal, trivial or insignificant. It should be seen for what it is, a significant volume of trading revenue albeit dwarfed by the money received from non-trading sources. The CFA put on no cogent evidence that $12.93 million was insignificant to its operations, and no evidence was given that it could be easily foregone by the organisation. Put another way, it is likely that the CFA would be impaired in its capacity to provide services in road accident rescue, fire equipment maintenance, fire safety consultancy or sale of fire safety related goods, which it regards as important in the range of services offered, if it was not able to charge fees for doing so.

100 Although the $12.93 million of trading income is plainly a substantial amount in absolute terms, it is only a small percentage relative to the CFA’s total income. Even so, I do not consider it is trivial or minimal in relative terms.

101 In E v Red Cross the Australian Red Cross Society was one of the respondents. Wilcox J held that its supply of blood and blood products was the gratuitous provision of a public welfare service, substantially at government expense, and was not a trading activity. The Red Cross received a total of $44.9 million from the government in respect of its non-trading blood supply services, and about $2 million from trading activities. Another respondent, a major hospital, made approximately $18 million from trading activities and, in the words of Wilcox J, that sum was dwarfed by a State government subsidy of $112 million. His Honour concluded that the disparity between the money earned through trading and the money received by way of government subsidy was unimportant explaining at 345:

Trading activities yielding some $18 million per year can only be described as substantial. It seems to me that the scale of the hospital’s trading activities in 1984-1985 was such that it should be regarded as then being a trading corporation.

See also United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board (1998) 83 FCR 346 (“UFU v MFB”) at 354 to 356 per Marshall J.

102 The CFA contends that both E v Red Cross and UFU v MFB were wrongly decided in that they incorrectly applied an absolute test. While I consider that the CFA’s trading revenue is plainly significant if considered in absolute terms, I do not approach the issue that way. Considering its trading revenue relative to its non-trading activities, the question is not without difficulty and is one of fact and degree. In my opinion the CFA undertakes sufficient trading for it to be seen as “not insubstantial”, not trivial, insignificant, marginal, minor or incidental, and I find that it is a trading corporation.”

[40] By contrast, in the earlier approach adopted in Hughes, Toohey J observed that “a trading activity may represent a significant part of a club’s income but be relatively insignificant in an overall consideration of the club’s activities”.

[41] Further, the provision of services, largely or wholly, free of charge, and whether they are provided for altruistic purposes not shared by commercial enterprises, are also relevant, but not determinative, considerations.’ (my emphases, endnotes omitted)

[8] The employer submitted that it ‘does not engage in trading and selling goods or services’ and is therefore not a trading corporation. However, in the employer’s latest financial report (for the financial year ended 30 June 2016), which it annexed to its own submissions, it disclosed $384,404 in ‘other income’ (listed as a separate category to ‘revenue received from government grants’, ‘rebates and recoveries’, ‘donations’ and ‘interest received’). This includes rental income and school and program fees, the latter presumably paid directly by students or their families, as the overriding category under which they are listed has been distinguished from government grants. The employer’s total revenue for the 2015-16 financial year was $2,904,270, so the ‘other income’ represents just over 13% of its income. I do not think this amount can properly be described as insignificant, incidental, trivial or unimportant.

[9] Ms Parfitt annexed to her submissions the employer’s annual report for the 2015-16 financial year. She highlighted parts of the report that describe a diverse range of services offered to the public for a fee, including landscaping and lawn maintenance, 2 and tax accounting and bookkeeping under the trading name All Things Finance.3 The report states that these are being operated as part of the employer’s expansion into ‘social enterprises… to establish alternative revenue streams for our organisation’.4 These social enterprises are described elsewhere in the report as ‘deliver[ing] competitive products and services to the market place’, ‘earn[ing] profits to sustain our direct services’ and ‘achiev[ing] commercial and social return’.5 Ms Parfitt also annexed a screenshot of a website for the Better Futures Hub operated by the employer, which advertises itself as a conference venue with accompanying catering services.

[10] The employer submitted that since it was registered with the Australian Charities and Not-for-Profits Commission and it ‘relies virtually entirely’ on government funding, it was not a trading corporation. I do not accept this submission. As the authorities cited above disclose, a corporation that operates as a charity or on a not-for-profit basis may still engage in trading activities substantial enough to warrant characterisation as a trading corporation. Similarly, the receipt of government funding, even in an amount sufficient to account for the whole cost of certain of the corporation’s activities, is not in itself entirely incompatible with being a trading corporation. If, separately to its government-funded activities, the corporation engages in ‘the acts of buying and selling that are at the very heart of trade’, 6 it may be characterised as a trading corporation.7

Conclusion

[11] While the employer may well be operating on a not-for-profit basis overall, it appears from the information before me that it offers a range of services for a fee. The income received from these is not insignificant. Further, the fact that the profit from these services may be reinvested into the other programs and activities the employer runs does not preclude them being classified as ‘trading activities’. I consider that the employer’s trading activities are substantial enough to characterise it as a ‘trading corporation’ for the purposes of s.51(xx) of the Australian Constitution. It follows that the employer is a constitutionally-covered business for the purpose of s.789FD of the Act.

[12] The employer’s jurisdictional objection is dismissed. Ms Parfitt is eligible to make her application for an order to stop bullying. The application will be returned to the head of the anti-bullying panel for further programming.

SENIOR DEPUTY PRESIDENT

Written submissions:

youthconnections.com.au: 6 March 2017

Angela Parfitt: 17 March 2017

 1   [2016] FWC 7886.

 2   YC Group Annual Report 2015-16 p 48.

 3   Ibid p 49.

 4   Ibid p 11.

 5   Ibid p 20.

 6   R v Trade Practices Tribunal: ex parte St George County Council (1974) 130 CLR 533 [14] (Stephen J).

 7   E v Australian Red Cross Society (1991) 27 FCR 310 [123].

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